Mortgage rates registered their sharpest drop in a year, on the back of concerns over consumers’ financial health.
The 30-year fixed-rate mortgage averaged 7.5% as of Thursday, according to new data released by Freddie Mac
That’s down 26 basis points from the previous week. One basis point is equal to one hundredth of a percentage point.
A year ago, the 30-year mortgage was averaging 7.08%.
The average rate on the 15-year mortgage was 6.81%, down from 7.03% last week. The 15-year mortgage was at 6.38% a year ago.
Freddie Mac’s weekly report on mortgage rates is based on thousands of applications received from lenders across the country that are submitted to Freddie Mac when a borrower applies for a mortgage.
Separate data from Mortgage News Daily said that the 30-year fixed-rate mortgage was averaging at 7.41% as of Thursday afternoon.
What Freddie Mac said: “As Treasury yields decline, the 30-year fixed-rate mortgage dropped a quarter of a percent, the largest one-week decrease since last November,” Sam Khater, the chief economist at Freddie Mac, said in a statement.
“Incoming data show that household debt continues to rise, primarily due to mortgage, credit card and student loan balances,” he added. “Many consumers are feeling strained by the high cost of living, so unless mortgage rates decrease significantly, the housing market will remain stagnant.”
What are economists saying? “Many buyers are pressing on and will act quickly when they see rates dip. Other prospective homebuyers will bide their time until after the first of the year, hoping for lower rates and more inventory,” Lisa Sturtevant, the chief economist at Bright MLS, said in a statement.
“While rates will come down in 2024, they are not coming back down to pandemic levels,” she added. “We are in a new era for mortgage rates where prospective homebuyers can expect rates to settle above 6%.”